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Yahoo lost a legal battle on Thursday in its fight to make a French court's order against the company unenforceable in the U.S.

In 2000, a French court ruled that Yahoo had to make it impossible for residents of France to participate in Nazi memorabilia auctions and to access content of that nature. If it failed to comply, Yahoo would have to pay a fine.

That lawsuit in France was brought by the Union of Jewish Students in France (UEJF) and the League Against Racism and Anti-Semitism (LICRA).

Saying it would be impossible to filter out users from a specific country to keep them from participating in such auctions and viewing such content, Yahoo at the time decided to remove the Nazi items and content from its Web site.

However, Yahoo later sued UEJF and LICRA in U.S. District Court for the Northern District of California in San Jose to have the French court's verdict declared unenforceable in the U.S., arguing that it violates the right to free speech.

The district court sided with Yahoo but the French parties filed an appeal with the Ninth U.S. Circuit Court of Appeals in San Francisco, which they won. Yahoo then asked the appeals court to again hear the case with 11 judges. That appeal was argued in March 2005.

On Thursday, the court, in a 99-page decision, dismissed Yahoo's appeal, with 6 judges rejecting Yahoo's arguments for two different reasons. Three judges ruled that California courts have no jurisdiction over these French organizations. Another three judges stated that the case isn't "ripe," meaning Yahoo hasn't suffered sufficient hardship stemming from the French court's decision.

"It is extremely unlikely that any penalty, if assessed, could ever be enforced against Yahoo in the United States. Further, First Amendment harm may not exist at all, given the possibility that Yahoo has now 'in large measure' complied with the French court’s orders through its voluntary actions, unrelated to the orders," the decision reads.

If Yahoo hasn't "in large measure" complied with the French court's orders, there is some possibility that in further restricting access to these French users, Yahoo might have to restrict access to American users, the court said. "But this possibility is, at this point, highly speculative. This level of harm is not sufficient to overcome the factual uncertainty bearing on the legal question presented and thereby to render this suit ripe," the decision further reads.

Yahoo now has the option to appeal to the U.S. Supreme Court. An attorney representing Yahoo in the case didn't immediately return a call seeking comment.

"We were seeking dismissal, so this is a win for my clients and we're very happy about that," said E. Randol Schoenberg, from the law firm Burris & Schoenberg, LLP in Los Angeles, who acted as lead counsel for UEJF and LICRA.

The court's decision on the issues of jurisdiction and ripeness were right on target, Schoenberg said in an interview. "Just because someone sues you in a foreign country doesn't mean you can come here and sue them. That's what Yahoo was trying to do and that was very unfair," Schoenberg said.

"We also felt that because our clients hadn't taken any steps to actually enforce any judgement against Yahoo or directed any activities that would have caused Yahoo to do anything in California we thought the case wasn't really ripe for adjudication," he added.